G.R. No. 200289, November 25, 2013
WESTWIND SHIPPING CORPORATION, Petitioners, v. UCPB GENERAL INSURANCE CO., INC. AND ASIAN TERMINALS, INC., Respondents.
[G.R. NO. 200314]
ORIENT FREIGHT INTERNATIONAL, INC., Petitioners, v. UCPB GENERAL INSURANCE CO., INC. AND ASIAN TERMINALS, INC., Respondent.
D E C I S I O N
WHEREFORE, premises considered, the instant appeal is hereby GRANTED. The Decision dated January 27, 2006 rendered by the court a quo is REVERSED AND SET ASIDE. Appellee Westwind Shipping Corporation is hereby ordered to pay to the appellant UCPB General Insurance Co., Inc., the amount of One Hundred Seventeen Thousand and Ninety-Three Pesos and Twelve Centavos (Php117,093.12), while Orient Freight International, Inc. is hereby ordered to pay to UCPB the sum of One Hundred Seventy-Five Thousand Six Hundred Thirty-Nine Pesos and Sixty-Eight Centavos (Php175,639.68). Both sums shall bear interest at the rate of six (6%) percent per annum, from the filing of the complaint on August 30, 1994 until the judgment becomes final and executory. Thereafter, an interest rate of twelve (12%) percent per annum shall be imposed from the time this decision becomes final and executory until full payment of said amounts.
Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them.
For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at the port of loading, until he delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed otherwise. In Standard Oil Co. of New York v. Lopez Castelo, the Court interpreted the ship captain’s liability as ultimately that of the shipowner by regarding the captain as the representative of the shipowner.
Lastly, Section 2 of the COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2) thereof then states that among the carriers’ responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.
x x x
On the other hand, the functions of an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the ship’s tackle. Being the custodian of the goods discharged from a vessel, an arrastre operator’s duty is to take good care of the goods and to turn them over to the party entitled to their possession.
Handling cargo is mainly the arrastre operator’s principal work so its drivers/operators or employees should observe the standards and measures necessary to prevent losses and damage to shipments under its custody.
In Fireman’s Fund Insurance Co. v. Metro Port Service, Inc., the Court explained the relationship and responsibility of an arrastre operator to a consignee of a cargo, to quote:chanRoblesvirtualLawlibraryThe legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator. Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the CARRIER. Both the ARRASTRE and the CARRIER are therefore charged with and obligated to deliver the goods in good condition to the consignee. (Emphasis supplied) (Citations omitted)
The liability of the arrastre operator was reiterated in Eastern Shipping Lines, Inc. v. Court of Appeals with the clarification that the arrastre operator and the carrier are not always and necessarily solidarily liable as the facts of a case may vary the rule.
Thus, in this case, the appellate court is correct insofar as it ruled that an arrastre operator and a carrier may not be held solidarily liable at all times. But the precise question is which entity had custody of the shipment during its unloading from the vessel?
The aforementioned Section 3 (2) of the COGSA states that among the carriers’ responsibilities are to properly and carefully load, care for and discharge the goods carried. The bill of lading covering the subject shipment likewise stipulates that the carrier’s liability for loss or damage to the goods ceases after its discharge from the vessel. Article 619 of the Code of Commerce holds a ship captain liable for the cargo from the time it is turned over to him until its delivery at the port of unloading.
In a case decided by a U.S. Circuit Court, Nichimen Company v. M/V Farland, it was ruled that like the duty of seaworthiness, the duty of care of the cargo is non-delegable, and the carrier is accordingly responsible for the acts of the master, the crew, the stevedore, and his other agents. It has also been held that it is ordinarily the duty of the master of a vessel to unload the cargo and place it in readiness for delivery to the consignee, and there is an implied obligation that this shall be accomplished with sound machinery, competent hands, and in such manner that no unnecessary injury shall be done thereto. And the fact that a consignee is required to furnish persons to assist in unloading a shipment may not relieve the carrier of its duty as to such unloading.
x x x
It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier x x x.13
Delsan’s argument that it should not be held liable for the loss of diesel oil due to backflow because the same had already been actually and legally delivered to Caltex at the time it entered the shore tank holds no water. It had been settled that the subject cargo was still in the custody of Delsan because the discharging thereof has not yet been finished when the backflow occurred. Since the discharging of the cargo into the depot has not yet been completed at the time of the spillage when the backflow occurred, there is no reason to imply that there was actual delivery of the cargo to the consignee. Delsan is straining the issue by insisting that when the diesel oil entered into the tank of Caltex on shore, there was legally, at that moment, a complete delivery thereof to Caltex. To be sure, the extraordinary responsibility of common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by, the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to a person who has the right to receive them. The discharging of oil products to Caltex Bulk Depot has not yet been finished, Delsan still has the duty to guard and to preserve the cargo. The carrier still has in it the responsibility to guard and preserve the goods, a duty incident to its having the goods transported.
To recapitulate, common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case. The mere proof of delivery of goods in good order to the carrier, and their arrival in the place of destination in bad order, make out a prima facie case against the carrier, so that if no explanation is given as to how the injury occurred, the carrier must be held responsible. It is incumbent upon the carrier to prove that the loss was due to accident or some other circumstances inconsistent with its liability.18
It is settled that under a given set of facts, a customs broker may be regarded as a common carrier. Thus, this Court, in A.F. Sanchez Brokerage, Inc. v. The Honorable Court of Appeals held:The appellate court did not err in finding petitioner, a customs broker, to be also a common carrier, as defined under Article 1732 of the Civil Code, to wit,And in Calvo v. UCPB General Insurance Co. Inc., this Court held that as the transportation of goods is an integral part of a customs broker, the customs broker is also a common carrier. For to declare otherwise “would be to deprive those with whom [it] contracts the protection which the law affords them notwithstanding the fact that the obligation to carry goods for [its] customers, is part and parcel of petitioner’s business.”21
Art. 1732. Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air, for compensation, offering their services to the public.
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Article 1732 does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying only as an ancillary activity. The contention, therefore, of petitioner that it is not a common carrier but a customs broker whose principal function is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that petitioner undertakes to deliver the goods for pecuniary consideration.
* Designated as Acting Member in lieu of Associate Justice Marvic Mario Victor F. Leonen, per Special Order No. 1605 dated November 20, 2013.
1 Penned by Associate Justice Elihu A. Ybañez, with Associate Justices Estela M. Perlas-Bernabe (now Supreme Court Associate Justice) and Remedios Salazar-Fernando, concurring; rollo (G.R. 200289), pp. 7-29, (G.R. 200314), pp. 25-47.
2Rollo (G.R. 200289), pp. 31-33; rollo (G.R. 200314), pp. 49-51.
3 Id. at 79-88, id. at 59-68.
4Rollo (G.R. 200289), p. 63.
5 Records, p. 343.
6 Id. at 1-8; rollo (G.R. 200289), pp. 59-62.
7 377 Phil. 1082 (1999).
8 96 Phil. 264 (1954).
9 432 Phil. 567 (2002).
10Rollo (G.R. 200289), pp. 27-28, rollo (G.R. 200314), pp. 45-46. (Emphasis in the original)
11 G.R. No. 165647, March 26, 2009, 582 SCRA 457.
13Philippines First Insurance Co., Inc. v. Wallem Phils. Shipping, Inc., supra note 11, at 466-472. (Emphasis supplied)
14 G.R. No. 168151, September 4, 2009, 598 SCRA 304.
15 G.R. Nos. 181163, 181262 and 181319, July 24, 2013.
16Samar Mining Company, Inc. v. Nordeutscher Lloyd and C.F. Sharp & Company, Inc., 217 Phil. 497, 506 (1984), citing 11Words and Phrases 676, citing Yazoo & MVR Company v. Altman, 187 SW 656, 657.
17 530 Phil. 332 (2006).
18Delsan Transport Lines, Inc. v. American Home Assurance Corp., supra, at 340-341.
19Loadmasters Customs Services, Inc. v. Glodel Brokerage Corporation, G.R. No. 179446, January 10, 2011, 639 SCRA 69, 80.
20 496 Phil. 437 (2005).
21 Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc., supra, at 450-551.
22 TSN, February 1, 1999, p. 11.
23 Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.
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24 In Compania Maritima v. Court of Appeals (G.R. No. L-31379, August 29, 1958, 164 SCRA 685, 692), the meaning of “extraordinary diligence in the vigilance over goods” was explained, thus:
The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding damage to, or destruction of the goods entrusted to it for safe carriage and delivery. It requires common carriers to render service with the greatest skill and foresight and “to use all reasonable means to ascertain the nature and characteristic of goods tendered for shipment, and to exercise due care in the handling and stowage, including such methods as their nature requires.”
25 Art. 1735. In all cases other than those mentioned in Nos. 1, 2, 3, 4, and 5 of the preceding article, if the goods are lost, destroyed or deteriorated, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as required on Article 1733.